Snap has spun off its generated video group into a new startup, Dotmo. The move is aimed at reducing AI costs for companies while maintaining access to future benefits.
Snap announced that it would spin off an internal group that worked on AI-powered video generation into a separate company called Dotmo. The new company will focus on developing AI models that create interactive gaming experiences.
The main reason cited for this move is the high cost of pursuing such development within a company.
Although Dotmo will officially become a separate company, it will maintain a close relationship with Snap. Specifically, Snap licenses the rights to Dotmo to adapt its technology into gaming and interactive platforms. The initial Dotmo team will be comprised of current Snap employees who are leaving to launch a new startup.
Dotmo planning and structure
Although Dotmo will not receive direct funding from Snap, executives say Chief Technology Officer Bobby Murphy will be the lead investor and will have a significant personal stake in the new company. However, Murphy will continue to work full time as Snap’s CTO and lead GenAI’s research and development initiatives.
In exchange for licensing its talent and technology, Snap will acquire a significant stake in Dotmo, which could result in significant future profits. Dotmo may also seek external funding in the future.
The move marks the second major spinoff of 2026. Previously, Snap spun off Specs into a separate company to focus on developing its smart eyewear product line. Snap’s stock price has since fluctuated due to concerns about the price of the new device, which is said to be worth about $2,200. The company also laid off about 1,000 employees this year.
Dotmo differs from Specs in that its team focuses on digital experiences, which are not Snap’s core priorities. However, company representatives note that Dotmo could become a partner in the future if the terms of cooperation are favorable.
Spinoffs can reduce the financial burden of a company’s AI efforts while maintaining access to potential profits through ownership of the new company. With this format, Snap aims to maintain control of development without sacrificing the potential for future profits from Dotmo.
Currently, Dotmo is considering bringing in external investors in the future, but at this stage the main focus is on developing AI-based interactive content and finding the best balance between innovation and the needs of Snap’s core platform.
On the other hand, such measures will allow us to reduce the financial burden of our internal AI projects while maintaining open access to the potential benefits of our Dotmo shareholding. In the long term, Dotmo could partner with Snap on mutually beneficial terms and in line with the growth of adjacent areas in the interactive content space.
In the future, Dotmo is considering bringing in outside investors, but for now the main focus is on developing AI-based interactive content and finding a balance between innovation and the needs of Snap’s core platform.
In summary, the Dotmo spinoff allows Snap to reduce the financial burden of its AI initiatives and maintain control of the technology, while leaving the door open to future profits from the success of startups focused on artificial intelligence-powered interactive experiences.
